Archives for August 2015

It’s the new American dream—working from home. However, home-based businesses face risks, too. They need commercial insurance coverage like any other business, as homeowners or auto insurance won’t cover common home-based business risks.

Here are just a few risks:

Did you hear the one about the delivery person?

Any injury that occurs in the course of business is not covered by homeowners insurance. For example, you can be found liable if delivery people are injured while making business-related deliveries. Or if a customer trips walking up the sidewalk to your home-based computer repair shop and breaks a hip, your homeowners insurance won’t cover injury expenses.

Business property

If that customer’s computer breaks into pieces during the fall and is destroyed, you’re responsible for her injuries and for the damaged property. And if a tree crushes the customer’s car parked in your driveway, you’re responsible for those damages, too.

Your homeowners insurance won’t just deny coverage for damage to another’s property relating to your business operations—it also won’t protect your business property, such as computers, printers, and devices, from theft or vandalism.

Furthermore, if that tree falls on your home, causing damage, your insurer will repair your home and most damage to it—but not your business property. This may not mean much for some home businesses, but it could sink those with expensive supplies and equipment.

Liability loopholes

Remember: Any business primarily run from home is considered home-based. For example, aside from showing properties, real estate agents who primarily work from home are actually running home-based business. If you drive on company business you will need commercial auto insurance. Even if the business makes minimal deliveries, regular auto insurance won’t cover business-related losses. It works like homeowners insurance—if it happened during the course of business or is business-related, it’s not covered.

Denying that you run a home-based business is not the answer. If you cause an accident, injuring other drivers and damaging their cars, your personal auto insurance won’t provide coverage. And some insurers may cancel your policy, because failing to inform them of vehicle-use type is fraudulent.

Accidents

Similarly, if customers or clients are injured in an accident in your car, they aren’t covered. Without proper coverage, you’ll have to pay judgments or claims.

Auto accident lawsuits are expensive enough, but when people are injured or their property damaged in or by your “business” vehicle, the ensuing lawsuit could be substantial.

If someone else hits you and doesn’t have insurance, or has insurance but not sufficient coverage to pay for damages, you’d face another issue. If you’re driving for business, have standard auto insurance, and are hit, you’d better hope the other person is insured, because you won’t be able to claim under your personal car insurance’s uninsured/underinsured motorists (UM/UIM) coverage.

Everything you own, including your business, could be at risk. But with commercial auto and business insurance, you’ll have the peace of mind you need to get on with business.

It’s been a few months since “Mobilegeddon.” So, as a small business owner, how’s that working for you?

Mobilegeddon happened in April when Google launched an algorithm favoring websites that are oriented to customers with mobile devices. Google’s mobile-friendly action (and similar moves by Facebook) required big changes to most websites to make them easy to read on small screens.

According to a pre-Mobilegeddon post in USA Today, techie Jefferson Graham predicted that 40% of major websites could be affected by Google’s new algorithm. And until they accommodate to this new reality, they’ll be virtually unfindable; “unfriendly” sites not only won’t top the rankings, they may not rank at all.

As Homes.com marketer Grant Simmons notes: “Website(s) will cease to exist if they don’t update to a mobile-friendly platform.” But he offers these solutions: Run Google’s mobile-friendly test; check out Google’s webmaster resources and invest in a mobile-friendly platform.

Sounds like an opportunity wrapped in a challenge. But is it too pricey for small businesses?

Not really: There are now several companies offering affordable products to make your site friendly for smartphone and tablet customers as well as other online shoppers. As Igor Faletski of mobile shopping platform Mobify points out: “Responsive web design enables web designers and developers to build and maintain a single website to serve all kinds of devices: smartphones, tablets, laptops, and more.”

If you aren’t there yet, you may want to consider your options. It’s a mobile world, and failure shouldn’t be one of those options.

If you provide B2B services, it’s not unlikely a client will someday ask the question, “Can you add me to your Errors & Omissions (E&O) Insurance policy?” It’s happened to real estate brokers, financial planners, and even insurance professionals. And the best answer is probably no. Here’s why.

E&O coverage is a type of liability insurance. It protects you if you become legally liable in a situation where a client is harmed in some way due to the service you provide. This includes negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. None of this is covered by general liability insurance.

Sharing with an AI

Your E&O policy will typically cover court costs and settlements up to the amount detailed in the policy. You need it. But when you act on behalf of another company, that company may also be affected by your actions. And sued. So, should you make that company an Additional Insured (AI) so it will be covered under your policy?

There are good reasons why not:

The contract may not allow the third party to be added as an AI.

As E&O policies are industry-specific, the AI’s operations may differ from yours, so it’s hard to cover both in the same policy. The coverage may not be relevant to the AI’s needs.

If the AI decides to sue you, but is on the same policy, its suit will likely fall under an insured vs. insured exclusion clause. And the insurer may not cover either of you.

Life insurance in its most basic form covers your loved ones’ expenses after your death—but there are a number of other ways to use this financial product, and they aren’t only for the very wealthy or the financially sophisticated.

Other uses for life insurance

For example, a life-insurance policy can help cover a financial shortfall in a couple’s retirement income. Let’s say you have a pension plan, and it makes up a significant portion of your retirement income. However, like many pension plans, it ends upon your death. Social Security benefits may be insufficient, and the result could leave your spouse with little to live on.

One solution: Buy life insurance to provide for your spouse upon your death. This could be a lump sum that can be converted to an income stream via some basic investments in bonds.

Financing a life insurance policy

The cost of life insurance depends on your age and health. Your agent should be able to give you options. But if you still think life insurance is too expensive after reviewing those options, there are creative ways of financing it. You might, for example, take out a reverse mortgage, then use a portion of the monthly payment to purchase a life insurance policy. This has the added benefit of giving you a roof over your heads while providing for your heirs upon your death.

Peace of mind

The bottom line: Life insurance can be a way to maximize your pension or income from Social Security, plus the peace of mind you’ll have from ensuring that your spouse will receive an insurance payment on your death.

So, when reviewing your retirement plan, it’s a good idea to look at the details of your pension or Social Security benefits and consider how life insurance could be complementary to your plan. Your life-insurance agent can assist you with this.

The U.S. spends more than $3 trillion dollars each year on health care, and as the population ages, that figure will rise. Sadly, this industry attracts more than its share of fraudsters. The Federal Bureau of Investigation, which acts to expose and investigate health care scams, estimates that “tens of billions of dollars” are lost every year at the hands of insurance scammers, causing increases in everyone’s premiums. So how can you recognize a scam and avoid falling victim to one?

Here are two examples:

One way scammers take advantage of consumers is by offering fake insurance policies. If it sounds too good to be true, it probably is. Working with a licensed insurance agent is the best way to find reliable, legal health insurance.

Another popular scam is medical discount cards. Those who sell them promise deep discounts on everything from medications to doctor visits, but these promises are empty. In the end, you’re stuck with high fees and no benefits. To protect yourself, make sure you research any claims a discount card offers and contact your local insurance agent for further investigation.

In fact, the best way to protect yourself from scammers is by asking questions. Reputable companies and insurance agents will welcome them and will answer to the best of their abilities. They’ll discuss the pros and cons of different policies and how they might work for you. Scammers? Not so much. As a consumer, be diligent about researching policies or discount cards before buying. It will benefit us all.

Organizers have dubbed the Faires concept “the greatest show (and tell) on earth.” Vendors range from students to professional engineers and artists, and the reach is global. Already this year, Maker Faires have been held in Egypt, Puerto Rico, Spain, Sweden, and the Ukraine. This fall, Berlin will host its first Faire. The concept was born when the creators of California-based Make magazine wanted to bring the tech-inspired DIY projects featured in the magazine’s pages to the general public. Make cofounder Sherry Huss defined a “maker” as “anyone who has a passion for what they do and is willing to share it.”

While surely passionate, many of the items showcased in Maker Faires are somewhat eccentric: art installations created from masking tape, a printer that makes edible pancakes by reading digital files, and a 17-foot robotic giraffe that has visited the White House are a few examples. Handmade soap is made from materials used in making home brews, and a modern wedding dress is hand-crocheted, as it may have been for brides in the mid-1800s.

So, far from being antagonistic to 21st century technology, Makers Faires intertwine the past with the present to delight thousands of visitors around the world. Look for one near you.

Packed lunches are often boring. So what’s a better way to spice up office or school lunches than, well, a little spice?

Caroline Craig and Sophie Missing, authors of The Little Book of Lunch, write in The Guardian: “Our palates have become accustomed to spicy and exotic additions, and we expect the deep, often complex flavor that spices provide whatever meal we’re eating.” And that’s especially true for drab, and sometimes rushed, lunchtime meals.

The authors’ suggestions include harissa, a Tunisian hot chili pepper paste that goes on everything from veggies to chicken dishes. (Refer to the Guardian post at http://tinyurl.com/Spicy-lunches or check online for recipes.) You can also add spicy oils to noodle soup, or rub leftover chicken with cumin and moisten with mayo for a yummy sandwich. Try marinating any meat with spices, roasting, and wrapping in a pita with lettuce and tomato.

But one word of caution: be sure to use thermoses or cold packs to keep your spicy lunches well chilled. Hummus and olives should be kept cold as well. Let’s face it: No one wants ptomaine poisoning—especially at lunch.

Life expectancy has increased significantly in the past 100 years: The life expectancy of a person born in 1900 was age 47, compared to 79 for a person born in 2012, according to the Centers for Disease Control and Prevention. But when it comes to retirement planning, it doesn’t matter how long you’ll live; it matters how long you’ll live in retirement.

Actually, that’s increased as well. In 1980, a 65-year old man on average would live another 14.1 years; by 2010, he could expect to live to 82.7—some three additional years. Those few years can significantly affect your retirement planning, especially when the rising costs of retirement are factored in.

Say your annual expenses in retirement are $50,000. If you live to age 79, you’d have to have $700,000; but if you live to age 82, you’d need a total of $850,000. That’s an increase of $150,000, or 21%.

And that doesn’t even take inflation into account. According to the Insured Retirement Institute (IRI), if inflation averages 3%, a 65-year-old living an additional 14 years would need $854,000 to meet his or her expenses; a 65-year-old living 17 more years would need $1,088,000—27% more.

Moreover, those numbers also don’t factor in the rising costs of many goods and services needed in retirement, such as health and long-term care, which tend to outpace inflation.

For example, the Milliman Medical Index (MMI), which tracks the total annual cost of health care for a typical family of four with employer-provided PPO insurance coverage, shows that health care will cost them $24,671 in 2015—a $1,456 (6.3%) increase over last year’s MMI. And the cost of both semiprivate and private accommodations in a nursing home is rising approximately 4% per year.

Are you ready? If you’re not sure, a financial advisor can certainly help you plan.

No matter what device you depend on—a flashlight, a smartphone, or a computer—it likely won’t work without a battery. Yet the science behind batteries has been relatively underwhelming. Until now.

Much of the key development work on batteries dates back to the 1800s. And since then the lowly battery has powered our society in a relatively low-key way. Now, however, the battery needs to join the 21st century. And investors such as billionaire Warren Buffet are betting its time has come.

As Michael J. De La Merced noted in The New York Times, “By essentially agreeing to swap his firm’s holdings in P&G, worth about $4.7 billion, in exchange for Duracell, Mr. Buffett will gain one of the best-known battery companies in the world.” Plus market share. While many claim Buffett’s purchase is a tax maneuver, others believe he sees big opportunities in today’s $50 billion global battery market. Batteries represent the new frontier. And Buffet is not alone in noticing.

Tesla, under CEO Elon Musk, recently launched the Powerwall home battery to revolutionize the way we use energy, envisioning a network of home batteries acting as power plants. The product, initially high-priced, will become more affordable and more desirable, Musk believes.

Meanwhile, Science Daily’s Battery News regularly highlights new developments in batteries, ranging from “squishies” made from wood pulp to an ultrafast aluminum battery. These days it seems a lot of important players are charged up over batteries. And they’re betting big.

Most adults over age 55 are way behind on retirement savings, according to a new survey. And that can be costly.

The survey of 968 respondents, conducted by Financial Engines, showed that 68% of adults age 55 and older have procrastinated when it comes to building a nest egg. Most respondents agreed that the best age to start saving is 25, but, ironically, few actually start saving until age 35.

It makes a difference. The study provides a hypothetical example in which someone who saves 6% of his or her $36,000 salary each year sees her savings increase by 1.5% a year due to raises, etc.

If the saver begins at age 25, assuming a 3% employer matching contribution and a 5% annual return, by age 65, he or she will have saved roughly $500,000. To reach the same goal when starting at age 35 or 40, however, the saver would have to contribute 12% (at 35) or 16.5% (at 40) annually.

Clearly, making up for lost time when it comes to retirement saving isn’t easy, but it’s not impossible, thanks to the power of compounding. And if returns are compounded in a tax-deferred account, such as an IRA or 401(k) plan, the potential income growth is even greater.

If, like many savers, you got off to a late start, don’t panic. Simply talk to your advisor and ask for suggestions. Together, you should be able to build a solid plan that addresses your individual financial circumstances and goals.